Iowa Banking Law Blog

FDIC Amends Regulation Governing Securities Transactions by Bank Officers

The FDIC's amendment to Section 344.9(a)(3) of its regulations extends the deadline for providing quarterly reports of personal secruities transactions from 10 business days to 30 calendar days after the end of the calendar quarter.  Under the rule officers and employees who, in connection with their duties, obtain information concerning securities in which they have an interest must report all of his or her securities transactions to the bank.  See FDIC Release.

The rule became effective on Monday, November 26, 2007. 

Interesting Legislation from D.C.

The District of Columbia City Council is considering legislation that would deposit a larger portion of the city's $2 billion of cash in local community banks.  Currently, most of D.C.'s funds are deposted in large national enterprises such as Bank of America and Wachovia.  Up to 10% of the city's funds could be deposited in smaller banks without the requirement of competitive bids.  The current version of the bill would set the asset size of banks exempt from submitting a bid at $550 million.       

Although the legislation may result in lower interest rates, proponents believe this would be far outweighed by the benefit to the community.  Proponents believe that community banks are more likely to lend to local businesses.   

New SBA Program -- Rural Lender Advantage

The Small Business Administration announced a new program designed to aid economic growth in rural areas.  Rural Lender Advantage allows rural lenders to partner with SBA with less paperwork involved and by offering online services.  The Rural Lender Advantage Program will feature online applications, expedited processing times, a shorter application for loans under $350,000, a guaranty of 85% for loans under 150k, 75% if more, and simplified documentation requirements and questionnaire's. 

The goal is to increase the use of SBA by rural lenders.  Rural Lender Advantage will be tested in Colorado, Montana, North Dakota, Utah and Wyoming.

Click here for the news release from SBA.

Federal Reserve Announces Consumer Help Website

On the heels of the OCC's helpwithmybank.gov website, the Federal Reserve has started a consumer help website.  www.federalreserveconsumerhelp.gov answers common consumers questions and allows consumers to submit complaints electronically.  For the Federal Reserve's release click here.

AMENDMENTS TO REGULATIONS ISSUED

In response to a request for comment issued in April, the Federal Reserve recently announced amendments to Regulations B, E, M, Z, and DD.  Regulation B implements the Equal Credit Opportunity Act, Regulation E implements the Electronic Fund Transfer Act, Regulation M implements the Consumer Leasing Act, Regulation Z implements the Truth in Lending Act, and Regulation DD implements the Truth in Savings Act.  The amendments for each of these regulations would withdraw certain unnecessary portions of the March 2001 interim final rules that restate the E-Sign Act and impose burdens on e-banking that are unnecessary for consumer protection.  The new amendments also adopt provisions that would guide the use of electronic disclosures.

A copy of the Federal Reserve press release can be found here. 

AGENCIES ISSUE NEW IDENTITY THEFT RULES

The Board of Governors of the Federal Reserve, the FDIC, the FTC, the NCUA, the OCC, OTC, and the FTC have published final rules requiring all financial institutions and creditors holding consumer accounts to develop and implement an Identity Theft Prevention Program.  The purpose of the Program will be to combat identity theft by requiring financial institutions and creditors to identify patterns of activity that would raise “red flags” which would signal possible identity theft, respond to any detected red flags, and update the Program periodically to reflect changes in identity theft risks.  The final rules also require credit and debit card issuers to develop procedures that assess the validity of a request for change of address and require consumer reports to develop policies when they receive a notice of address discrepancy from a consumer reporting agency.

A copy of the joint rulemaking can be found here.

FINCEN DISCLOSES COMMON SAR MISTAKES

On October 10, 2007, FinCEN issued a statement titled “Suggestions for Addressing Common Errors Noted in Suspicious Activity Reporting.”  While the report does not propose any new requirements, it is intended to be informative and helpful for correcting some of the most common mistakes concerning SAR narratives and the entry of certain fields for analyzing where activity has occurred and fields that identify the type, category, and character of the suspicious activity.

Regarding SAR narratives  –  which ideally identify as fully as possible why the activity is suspicious – the most common mistakes are leaving the narrative field blank, attaching supporting documentation even though it is prohibited or else failing to fully describe the contents of the supporting documentation, and failing to supply adequate narratives.

Regarding the fields of critical value – which are examined by users to track activity and follow-up on leads and used by FinCEN to develop analytical products that are distributed to law enforcement – the common mistakes include failing to include specific special responses where required when data is unavailable (e.g., the entry, “N/A,” would be inappropriate in these particular fields where a specific response is desired) and failing to include such information as Employer Identification Numbers, telephone numbers, social security numbers or government issued identification.

Regarding the fields where the category and character of suspicious activity is identified, the common mistakes are failing to include the category, type, or characterization of the suspicious activity (otherwise, FinCEN cannot determine why the activity is being reported as suspicious) and providing an incorrect characterization of the suspicious activity.

A copy of the FinCEN statement can be reviewed here.